Bipartisan Reaction Kills Medicare Part B Value-Based Proposal

Announced in March, the Centers for Medicare and Medicaid Innovation (CMMI) planned a far-reaching pilot that would affect how physicians are reimbursed for administration of part B drugs. Apparently, the pilot was too far a reach, as it elicited strong criticism from nearly all stakeholders. On December 15, the federal government announced that the plan was now withdrawn.

The centerpiece of the program was a change in the way physicians are reimbursed for purchasing and administration of the medications. Under the pilot, which was to extend to most Medicare participating medical practices, clinicians would be paid at the average sales price of the drug plus 2.5% (presently at ASP + 4.3%) in addition to a flat rate of $16.80. From a biosimilar industry standpoint, this was objectionable, because higher priced drugs (presumably originators) would be subject to greater reimbursements to doctors, which ran counter to the concept of value-based alignment.

As reported in the New York Times, a spokesperson for the Department of Health and Human Services stated, “The proposal was intended to test whether alternative drug payment structures would improve the quality of patient care and the value of Medicare drug spending. While there was a great deal of support from some, a number of stakeholders expressed strong concerns.” The spokesperson concluded, “The complexity of the issues and limited time available led to the decision not to finalize the rule at this time.”

It is not known that the transition to a new administration may have also played a role, but the aggressive timeline set by the Centers for Medicare and Medicaid Services left little time to attempt adjustments to the pilot, accept public comments, and publish final rules.